Regulators settled a 3-year-old accounting probe of
Monday, sternly warning the telecom company and three former execs not to break securities laws.
The move closes the book on the inquiry into Global Crossing's accounting for so-called reciprocal transactions, a maneuver that investigators believe many companies used to pad their results during the telecom boom of the late 1990s.
On Monday, the
Securities and Exchange Commission
issued cease-and-desist orders against the Florham Park, N.J., company and former CEO Thomas Casey, former Chief Accounting Officer Joseph Perrone and former Chief Financial Officer Dan Cohrs. The three each agreed to pay a $100,000 fine.
Neither the company nor the executives admitted any wrongdoing, and the company cooperated with the SEC in the investigation.
"We're happy to have reached a settlement with the SEC and that we can put these issues solidly behind us without a finding of fraud or a financial penalty against the company," said CEO John Legere. "We look forward to focusing on Global Crossing's bright future and building our brand as a provider of IP services to our customers around the world."
Global Crossing filed for bankruptcy protection in January 2002 amid a swirl of accounting questions and the dramatic decline of the telecom industry. The company emerged from bankruptcy in late 2003 with the financial support of Singapore Technologies Telemedia.
Some critics accused companies like Global Crossing of trading network capacity for equal bandwidth on other networks, and then treating incoming cash as revenue while charging the outlay as a capital expenditure over a longer period of time. Such treatment could improve a company's numbers.
Last year, the SEC decided against pursuing a case against Global Crossing founder Gary Winnick.
On Monday, Global Crossing dropped 6 cents to $14.74.